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Ocado Shares Trade Above IPO Price for First Time

Jan. 4 (Bloomberg) -- Ocado Group Plc, an unprofitable U.K. online grocer, traded above its initial public offering price for the first time in London as the shares continued to climb ahead of a fourth-quarter sales update on Jan. 10.

“The expectation is that Monday’s news will be very good,” said Nick Bubb, an analyst at Arden Partners in London. “The share price is telling you that.”

The shares rose 18.4 pence, or 10 percent, to 196.7 pence, the steepest gain since Dec. 3. They were sold at 180 pence in the July IPO after the company reduced the price from an initial range of 200 pence to 275 pence. The price fell as low as 123.5 pence in October.

The IPO raised funds of 369 million pounds ($576 million) to help the company expand beyond London and southeast England. The online retailer said Oct. 12 it will spend about 21.3 million pounds buying a site in central England for a second warehouse. It also plans to build a distribution center in Bristol, expanding its coverage of southwest England and Wales.

“It definitely got oversold,” said Bubb, who doesn’t have a recommendation on the stock.

Ocado, based in Hatfield, England, hasn’t made a profit in its 11-year history. The first-half operating loss was 2.7 million pounds, it said in July.

Ocado is Britain’s fourth-largest online food and grocery retailer after store-based companies Tesco Plc, J Sainsbury Plc and Wal-Mart Stores Inc.’s Asda, according to Verdict Research.

Ocado has the right to sell goods of the Waitrose grocery chain and to use the brand on its website and fleet of vans until 2020.

To contact the reporter on this story: Paul Jarvis at pjarvis@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net.

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